annenberg media ♪ captioning sponsored by annenberg/cpb narrator: the geographic region of east asia encompasses three subregions:

japan; north and south korea; and china, mongolia and taiwan. the late 1900s saw the reemergence of east asia as a world political, economic and cultural force. nearly 1.3 billion people reside in the region's largest country, china. the province of guangdong is on china's southern coast. this area has sustained extraordinary growth in recent decades, thriving as a base of manufacture for a global economy. advancements in communication and transportation facilitate globalization. containerized shipping is a cost-effective means of transporting a variety of goods. guangdong's relative location to hong kong's ports and financial infrastructure is key to determining its position at the epicenter of chinese economic development. through guangdong, we see the forces of globalization at work

in the pearl river delta and beyond. many observers argue the costs and benefits, but few dispute that globalization is the most profound reorganization of the world since the industrial revolution. the driving force of globalization is economic, and at the core of the global economy is the global production system. du neng ji makes nike shoes-- one of tens of thousands of nike employees scattered across the world. du neng ji and his fellow workers are a small part of the chinese link in the chain of global production. ( du neng ji speaking chinese ) translator: the reason i came to work here is simply to earn a living. i came from chendgu in sichuan province. i didn't have much of a job back home.

i've been working at the number two factory for 2½ years. i feel good about it. my ambition is to become a manager. narrator: most of these workers are like du neng ji. until the factories came, they either ratched out a ling from farming or had no work at all. now life has changed dramatically. ( du neng ji speaking chinese ) translator: although we have to work hard for eight to nine, sometimes ten hours a day, i still feel very happy. i live in a dormitory, but i feel as if i'm living at home. narrator: millions of chinese have left their homes to work in places like guangdong. man: china has changed. it's one of the most exciting places to be doing business in the world right now. narrator: these workers make almost half a million shoes a month, but nike could have these shoes made anywhere in the wld.

why did they choose to make them here? the answer lies in a mix of local and global factors. thctory is located in guangdong province in southern china, near the capital, guangzhou, and about 100 kilometers from hong kong. and the proximity of hong kong is the key to massive foreign investment throughout guangdong province. people who work in the world economy, who work in the global trading system, trust hong kong. they know what to expect there. they know they're going to have certain guarantees if they invest money, and this is what is really driving this thing. it's that... it's that proximity to a system that they know and trust and feel very comfortable working in. narrator: the guangdong factory where du neng ji works is owned by a taiwanese company and operated jointly by taiwanese and chinese management. and when these entrepreneurs or investors operate from hong kong-- these overseas chinese--

they are coming into a cultural milieu, a cultural environment where they feel quite comfortable. sohe idea ofative place, where someone originated from is a very, very powerful current in chinese culture even today. narrator: so here, local factors such as its location relative to hong kong, cultural and ethnic links throughout the region and a history of stable trade relations all contribute to guangng's rapid economic growth in recent decades. but just as important are the global forces exerted by the spread of global production systems. the pattern of development for global production facilities has been shaped by the drive for cheap labor. man: the diusion from japan to south korea to taiwan and then subsequently to other parts of southeast asia is driven by seeking low-we labor.

narrator: and the search for inexpensive labor has led companies like nike to china. comparedith ny parts of the wor such as america, europe or japan, comparedith ny parts du nenji earns little-- the equivalent of just 80 u.s. dollars a month. however, by chinese standards, he and his fellow workers earn a healthy wage. the changes the new industry brings to china are dramatic. by the mid-1990s, more than half a million factories were at work in guangdong province. onop brown: it is an emerging, uh, ge growtcountry, uh, ve eiting. there's building going on everywhere. the whole province, the whole country, basically, is under construction. narrator: towering hotels and commercial buildings show china's ambition to play a key role on the worldconomic stag

in 2001, after years of negotiation, china was admitted to the world trade organization, cementing its role as a player in the global economy. this nike factory, for example, ts in a chain of productn that stretches around the globe. orders for nike footwear are placed in its headquarters in beaverton, oregon, in the united states. complex communication systems allow the head office to arrange raw materials and allocate production to factories around the globe. guangdong has virtually none of the raw materials for making shoes, but they can be imported through hong kong. and here in hong kong, we finally meet the unsung hero of the global economy-- the freight container of containerized shipping. this homely steel box holds up to 60,000 pounds of raw materials,

like rubr or leather or finished goods like sneakers. and since it was invented in 1956, it has slashed shipping costs dramatically. in just the last 15 years, the cost of shipping a vcr across the pacific was reduced by 95% from $30 to about $1.50. computer tracking and instant communications have also improved efficiency of the global assembly line. as these bar codes are read, nike's main computer on the other side ofhe world is automatically updated. the computer tracks production supplies right to the factory floor.d. this leather came from venezuela, the rubber from malaysia. these synthetics came from taiwan, japan, germany and america. all nike's shoes made here in china are sent back through hong kong for export.

and here the bar code reader again connects to corporate headquarters to track the delivery of the finished goods to customers around the world. nike is able to harness low-wage structures through use of its flexible production system and with the encouragement and support of china's government. nike doesn't own these factories. production cane moved at very short notice. that means nike could stop producing here if wages became too expensive. but according to cliff pannell, that'snlikely. pannell: the labor force in china is huge. there are, uh, over 600 million people at work in china. uh, most of them are still in the agricultural sector of the economy. and there are too many. there are probably at least a hundred million redundant laborers in the agricultural work force. what to do with them?

how to make them more productive? well, one thing is you've got to enhance their mobility and allow them to go where the jobs are, and the jobs are down in places like guangdong province and the pearl river delta. new factories are building, a lot of new construction workers are needed, transportation workers are needed, factory workers are needed. narrator: and here we can begin to see the local impact of the powerful forces at play in this globalizing economy. migration, urbanization, cultural and social change are echoing across this region. pannell: this is going toe one of the great human processes of change that happens anywhere in the world-- this enormous flow of people out of the rural areas into the cities or the peripheral areas of the cities where these factories are, taking up these jobs. narrator: wherever you look at the process of globalization, you will find evidence of local change. managing the social and political friction th such large-scale change inevitably creates

is sure to be among the new century's biggest challenges. in guangdong, we see globalization in actio it works here because of the very specific characteristics of this unique place. the province's available labor force, the transportation of containerized shipping, a communication infrastructure, the relatively stable political environment and the relative location and cultural connections with hong kong all make guangdong a noteworthy player in the global production enterprise. in the geographic region of east asia is the island of taiwan. only about 250 miles from end to end, it is dwarfed by mighty china. however, taiwan'ssmall s a powerful economic tiger. today its thriving high-tech industries hungrily eye china's enormous market,

but until recently investment in china was forbidden. old antagonisms stemming from china's 1949 communist revolution have estranged taiwan from its motherland. even so, taiwanese entrepreneurs have moved into china. we'll hear from one geographer who sees taiwan acting as an interface region between chinese business and western technology. a big question here is whether business relationships can transcend and perhaps ease long-standing political tensions. the peak-hour traffic in taipei is evidence of taiwan's growth as a powerhouse of development. taiwan's affluen is reflected in the high level of motor-vehicle ownership. in the past, it became known around world as a producer of cheap labor-intensive goods, such as clothing and textiles.

today it is a major player in the development and manufacture of high-tech computer and telecom pructs and among the world's most rapidly developing economies. how was this change possible? just 60 years ago taiwan's economy was based largely on agriculture. its modernization began with the development of labor-intensive light-manufacturing industries. by the 1960s the world began to recognize the "made in taiwan" label on clothing and footwear. in the 1980s, taiwan was supplying electronic products to world markets. but by the 1990s, machinery and information and communications products

were taiwan's biggest exports. development of these industries was no accident. about 30 miles southwest of taipei is hsinchu science-based industrial park, home to around 200 companies. founded by the government in 1979, hsinchu science park was part of a master plan to jump-start a high-tech microelectronics industry in taiwan. that plan began with a transfer of technology know-how from abroad, particularly from the united states. with a transfer of technology a team of researchers was sent to learn the integrated circuit, or i.c., industry from the american electronics giant rca. when they returned, the government saw its chance to cultivate this high-tech know-how taiwanese geographer stjinn-yuh hsuny. has been examining the factors critical to the development of taiwan's high-tech industry.

basically, for taiwan's high-tech industry, the government play a very critical role in the process in the beginning stage. however, i think there's another key factor who pushed the taiwan high- technology industry forward, which come from the silicon valley returnees. narrator: silicon valley returnees. in the 1970s, many taiwanese students went overseas to study and work. mr. hsing tuan is president of unipac optoelectronics in hsinchu park. his story is typical of the silicon valley returnees. he studied for his bachelor degree in taiwan but then went on stanford university in california to complete his doctorate. after 12 years working on research and development in california's silicon valley, he went home to taiwan.

if i compare taiwan and the u.s., i would say that taiwan is very much like the early days of the west coast in... in the u.s., the so-called gold... gold rush time... you know, era. that is, there are more opportunities here than in the states, i think. and... so many of us who came back here look for challenges, and we certainly found many challenges. narrator: in the 1980s, entrepreneurial returnees started more than 100 small firms, all with the support of the taiwanese government. science parks like hsinchu provided infrastructure and a space for experimentation and innovation. man: we kind of evolved into another technology-oriented stage. the science park is treated

as a kind of... you call it the enterprise zone, similar to united states or in european countries. narrator: the parks also provided financial concessions for companies to locate there. tuan: the science-based industrial park provides many monetary incentives to a company. for example, for the first five years, the company doesn't have to pay tax to the country, and also there are several very good universities nearby which provide the kind of high-tech people we need. narrator: taiwan's shepherding strategy, critical to nurturing a fledgling industry, was strikingly different from similarly developing economies like korea. in korea, basically the government pick up the winner, so they choose the big company, and the government borrows money

for them to enter a new area, like samsung or like hyundai. but in taiwan, basically the government just set up the bottom line. they say, "okay, everyone, ba"if you could choosent jua strategical area,m line. you can enter and the government will support you." so, under the circumstance, lots of small companies can survive in taiwan's environment. narrator: that strategy made successful companies such as mr. tuan's unipac optoelectronics possible. tuan: our main products are tft-lcd. tft-lcd is the newest and best color flat-panel displays now, and since taiwan is a very big producer for portable products, such as portable tv and notebook pcs, and that is the reason we would like to make this kind of flat-panel display-- to support our local... local manufacturers

of such portable products. narrator: as a testament to its success, hsinchu park is running out of space. every year, more than 20 companies apply to become part of this high-tech development enclave. the park is ving difficuy absorbing all these new enterprises. to deal with this situation, the taiwanese government is establishing science parks in other regions of taiwan. science parks like hsinchu are a crucial catalyst in maintaining the growth and development which will allow taiwan to export homegrown technology. you have to expand your market area to areas outside of taiwan. and you look at the map, then it's very natural. you could think that mainland china is part ofhe markets. narrator: the relationship betweenaiwan and mainland china has en strained since 1949. in the wake of the communist revolution, chinese nationalists fled to taiwan

and established their own government. polical tensions continue to flare on both sides of t strait. each society has those who desire independence for taiwan and others who believe taiwan should be reunified with china. and china's use of force to bring about reunification has always been a tacit threat. but the lure of lucrative business ventures may be able to transcend even political concerns. tapping china's high-tech market marks a third wave of taiwanese movement across the strait. 1986 saw the first wave. manufacturers ofonal goods like clothing and toys set up factories in china's southern guadong province. there they found cheap land and labofor their assembly plants. in the 1990s, chp labor again drew theakers of personal couter cponent pas to gngdong province. these components were sembled

for the u.s. and japanese pc brands that dominated the lucrative american market, a market that proved difficult to enter for then unknown taiwanese brands. in 2001, china joined the world trade organization, but as early as 1997, china's membership seemed assured. the opening of china's market was the big break taiwanese hig. no longer was china just a manufacturing base for other markets. it was the market, a rapidly developing economy eager for taiwan brands. but to reach that market, taiwan needed a more central location. guangdong was too far south, too marginal. so the third wave of cross-strait investment targeted shanghai and the chang jiang river delta. gateway to central china,

targeted shanghai and the chang jiang river delta. shanghai provided access to china's heartland market, and perhaps just as important, access to the well-educated work force critical to hi-tech manufacture and development. hsu: the third wave, basically, the i.c.... i.c. industry, and they look for some talented people, engineers, not just for cheap labor. and basically inhina, the chang jiang delta is one of the most developed areas in china, particularly in industry structure and also if you look at education level. okay, so, this area is... is good for marketing and also recruiting engineers. narrator: but the move to shanghai is not just about selling computers. it's about an opportunity presented by something geographer hsu calls the "interface region." "interface region" means... okay, means we have... silicon valley is a socioeconomic space,

and china is another one. okay, and taiwan just overlapped these two regions. narrator: in this triangular space connecting silicon valley, taiwan and china lies the prospect of a mutually beneficial exchange of ideas and know-how. and taiwanese firms are uniquely qualified to facilitate that exchange. hsu: we have a long experience of business transaction with silicon valley, and we know the lure of the market, lure about how to run a high-tech business. we learned from silicon valley. and we have so dense social network in the technical community between these two regions, silicon valley and taiwan. we know china's market much better than those western companies. so i think, for taiwan, the way we can play is to play as an agent between the silicon valley firm technology

and the china market-- try to connect these two together. narrator: with their silicon valley backgrounds and chinese culture, taiwanese firms have a unique opportunity to play a decisive role in china's developing high-tech industry. but geographer hsu notes they must act quickly. soon, china will have its own versions of silicon valley returnees. hsu: china already sent a lot of students to study in... in u.s. after '89. they study here four years, five years, get a degree, and then work in a big company, just like the story in taiwan. the time for taiwan is very short, the timing is very short, maybe just three to five years. if we cannot play the role well, we will lose opportunity, and the window of opportunity will close up, and i think taiwan will be... gradually, you know, fade out

of the high tech and the economy. narrator: taiwan's having a role in china's high-tech industry is especially striking given their long estrangement. both governments actively discouraged cross-strait investment. but things are changing. in 1993, taiwan's government had a policy of "don't rush, be patient," to stem the tide of investment in china. but under new president shui-bian chen, iwan has entered a transitional period. the government knows it cannot deny the momentum of business expansion. and on the mainland, local governments hotly compete for taiwanese investors, providing tax breaks and other incentives, because they know they are getting not only the technology but the people behind the technology. you need people, because today,

most of technology is embodied in human people. and if you have cultural affinity and if you can speak the same language and you know each other very well, you can get the transfer down very well. narrator: and in the end, that may be the most important of all. hsu: and maybe after 50 years, after a long term of businesses and cultural exchange, maybe we can talk about if we can unite or separate. i think most of taiwanese people, you know, buy this idea-- wait and see. narrator: so much depends on the future of political relations between taiwan and china. for now, the answer is "wait and see."

taiwan once associatesia'sbig. with the assembly of cheap, inferior goods,tor is a leader in high-tech manufacture and development. with the knowledge of its silicon valley returnees and ability to work as an interface region, taiwan has the opportunity to play a major role in china's high-tech development. deite political differences between taiwan and china, there is hope that increasing economic integration can ease political tensions and provide further growth to the benefit of both.

captioned by media access group at wgbh access.wgbh.org